ARTLP The Aristotle (MM)

The Aristotle Corporation (NASDAQ: ARTL; ARTLP) announced today its results of operations for the third quarter and nine months ended September 30, 2008. For the third quarter ended September 30, 2008, net earnings applicable to common stockholders were $4.7 million, or $.26 per diluted common share, versus $5.5 million, or $.31 per diluted common share, for the third quarter of 2007. Net earnings applicable to common stockholders for the first nine months of 2008 were $12.0 million, or $.67 per diluted common share, compared to $11.8 million, or $.67 per diluted common share, for the comparable nine months of 2007. Third quarter net sales in 2008 increased 2.3% to $65.0 million from $63.5 million in the third quarter of 2007. Earnings from operations, equating to 18.0% of net sales, declined 5.6% to $11.7 million from $12.4 million in the same quarter of 2007 (including an insurance recovery of $.4 million), or 19.5% of net sales. For the nine months ended September 30, 2008, net sales increased 2.5% to $172.2 million from $168.0 million for the nine months ended September 30, 2007. Earnings from operations increased 3.2% to $30.3 million (including a $.7 million insurance recovery) in the first nine months of 2008, or 17.6% of net sales, compared to $29.4 million (including the $.4 million insurance recovery) in the 2007 period, or 17.5% of net sales. Steven B. Lapin, Aristotle�s President and Chief Operating Officer, stated, �Aristotle�s balance sheet is exceptionally strong, with stockholders� equity having increased by 13.3% to $127.0 million at September 30, 2008 from $112.1 million at September 30, 2007, and current outstanding bank debt of a modest $5.0 million on its $45.0 million revolving line of credit. Although volatility in the equity markets did have a negative impact on diluted earnings per common share in the three and nine month periods ended September 30, 2008 of approximately $.02 and $.01, respectively, the change in value of Aristotle�s short-term investments is not material to your Company�s available working capital or financial condition. While I am pleased to report your Company�s sales growth and significant profitability in the third quarter and first nine months of 2008, optimism must be tempered in view of unprecedented challenges now facing local, state, federal and global economies.� About Aristotle The Aristotle Corporation, founded in 1986, and headquartered in Stamford, CT, is a leading manufacturer and global distributor of educational, health, medical technology and agricultural products. A selection of over 80,000 items is offered, primarily through more than 45 separate catalogs carrying the brand of Nasco (founded in 1941), as well as those bearing the brands of Life/Form�, Whirl-Pak�, Simulaids, Triarco, Spectrum Educational Supplies, Hubbard Scientific, Scott Resources, Haan Crafts, To-Sew, CPR Prompt�, Ginsberg Scientific and Summit Learning. Products include educational materials and supplies for substantially all K-12 curricula, molded plastics, biological materials, medical simulators, health care products and items for the agricultural, senior care and food industries. Aristotle has approximately 900 full-time employees at its operations in Fort Atkinson, WI, Modesto, CA, Fort Collins, CO, Plymouth, MN, Saugerties, NY, Chippewa Falls, WI, Otterbein, IN and Newmarket, Ontario, Canada. There are 18.0 million shares outstanding of Aristotle common stock (NASDAQ: ARTL) and 1.1 million shares outstanding of Series I preferred stock (NASDAQ: ARTLP); there are also 11.0 million privately-held shares outstanding of Series J preferred stock. Aristotle has about 4,000 stockholders of record. Further information about Aristotle can be obtained on its website, at aristotlecorp.net. Safe Harbor under the Private Securities Litigation Reform Act of 1995 To the extent that any of the statements contained in this release are forward-looking, such statements are based on current expectations that involve a number of uncertainties and risks that could cause actual results to differ materially from those projected or suggested in such forward-looking statements. Aristotle cautions investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors, including, but not limited to, the following: (i) the ability of Aristotle to obtain financing and additional capital to fund its business strategy on acceptable terms, if at all; (ii) the ability of Aristotle on a timely basis to find, prudently negotiate and consummate additional acquisitions; (iii) the ability of Aristotle to manage any to-be acquired businesses; (iv) there is not an active trading market for the Company�s securities and the stock prices thereof are highly volatile, due in part to the relatively small percentage of the Company�s securities which is not held by the Company�s majority stockholder and members of the Company�s Board of Directors and management; (v) the ability of Aristotle to retain its Federal net operating tax loss carryforward position and other deferred tax positions; and (vi) other factors identified in Item 1A, Risk Factors, contained in the Company�s Annual Report on Form 10-K for the year ended December 31, 2007. As a result, Aristotle�s future development efforts involve a high degree of risk. For further information, please see Aristotle�s filings with the Securities and Exchange Commission, including its Forms 10-K, 10-K/A, 10-Q and 8-K. THE ARISTOTLE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) (Unaudited) � � � Three Months Ended � Nine Months Ended September 30, September 30, 2008 � 2007 2008 � 2007 � Net sales $ 64,976 63,524 172,202 167,950 Cost of sales 40,123 39,017 105,116 102,909 Gross profit 24,853 24,507 67,086 65,041 � Selling and administrative expense 13,178 12,133 36,795 35,677 Earnings from operations 11,675 12,374 30,291 29,364 � Other (expense) income: Interest expense (260) (393) (833) (1,082) Other, net (428) 453 162 1,216 (688) 60 (671) 134 Earnings before income taxes 10,987 12,434 29,620 29,498 � Income tax expense (benefit): Current 4,234 4,690 10,568 8,596 Deferred (109) 84 564 2,623 4,125 4,774 11,132 11,219 Net earnings 6,862 7,660 18,488 18,279 � Preferred dividends 2,155 2,154 6,467 6,470 Net earnings applicable to common stockholders $ 4,707 5,506 12,021 11,809 � Earnings per common share: Basic $ .26 .31 .67 .67 Diluted $ .26 .31 .67 .67 � Weighted average common shares outstanding: Basic 17,962,875 17,927,671 17,962,209 17,552,073 Diluted 17,968,921 17,946,013 17,971,305 17,569,502 THE ARISTOTLE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) � Assets � September 30, 2008 � December 31, 2007 � September 30, 2007 (unaudited) (unaudited) Current assets: Cash and cash equivalents $ 7,138 5,604 3,173 Marketable securities � 2,480 3,335 2,886 Investments 21,991 18,150 15,761 Accounts receivable, net 26,175 15,631 27,975 Inventories, net 42,388 42,297 40,046 Prepaid expenses and other 4,000 9,611 5,084 Deferred income taxes 1,788 2,484 2,634 Total current assets 105,960 97,112 97,559 � Property, plant and equipment, net 28,429 27,476 27,140 � Goodwill 14,186 14,476 14,458 Deferred income taxes 5,646 5,646 8,188 Investments 4,318 4,279 4,000 Other assets 817 446 391 Total assets $ 159,356 149,435 151,736 � Liabilities and Stockholders' Equity � Current liabilities: Current installments of long-term debt $ 299 305 300 Trade accounts payable 9,331 10,500 8,593 Accrued expenses 7,537 6,765 6,814 Income Taxes 184 - 4,434 Accrued dividends payable - 2,156 - Total current liabilities 17,351 19,726 20,141 � Long term debt, less current installments 10,434 8,655 14,237 Long term pension obligations 2,115 2,944 2,808 Other long term accruals 2,458 2,429 2,424 � Stockholders' equity: Preferred stock, Series I 6,489 6,489 6,489 Preferred stock, Series J 65,760 65,760 65,760 Common stock 180 179 179 Additional paid-in capital 7,685 7,580 6,867 Retained earnings 46,985 34,964 31,866 Accumulated other comprehensive earnings (loss) (101) 709 965 Total stockholders' equity 126,998 115,681 112,126 Total liabilities and stockholders' equity $ 159,356 149,435 151,736